Since the 1980s, both incoming shortwave radiation (SW) and atmospheric vapor pressure deficit (VPD) have increased significantly across Europe and are projected to continue rising in the coming decades, potentially altering forest photosynthesis and carbon storage. However, the joint impacts of SW and VPD on forest carbon sequestration remain poorly understood. Here, using half-hourly flux tower observations combined with remotely sensed vegetation indices, we show that SW and VPD are the dominant energy- and water-related drivers of forest net ecosystem exchange (NEE; negative values indicate net carbon uptake) at the half-hourly scale across Europe. We identify two thresholds in the VPD–NEE relationship. For VPD values below 3.90 hPa, the influence of VPD on NEE is weakly negative. Above this threshold, VPD’s effect on NEE increases approximately linearly, shifting from negative to positive as VPD rises. A second threshold is detected at 20.84 hPa, beyond which the effect of VPD continues to increase but at a slower rate. The influence of VPD on NEE is strongly mediated by SW, with the sensitivity of NEE to VPD increasing more steeply under high SW conditions than under low SW conditions. This pattern is consistent with stronger stomatal limitation under high-radiation conditions, thereby suppressing photosynthesis and altering NEE. Together, these findings suggest that future increases in atmospheric dryness—potentially reinforced by continued brightening—may substantially constrain forest productivity and carbon sequestration in Europe. Our results underscore the importance of accounting for SW–VPD interactions in climate impact assessments and forest management strategies.